CARY, N.C. -

After Canada made improvements on the job front during the closing two months of last year, the employment picture turned murky again to begin 2021 triggered by a second wave of lockdowns because of the pandemic.

However, experts are expecting the Canadian economy to rebound mightily given monetary and fiscal stimulus combined with a surge of pent-up demand, according to the BMO Blue Book.

First, let’s clear the negative data.

Employment in Canada decreased by 231,200 jobs from December to January, according to the January ADP Canada National Employment Report. The report, which is derived from actual ADP payroll data, measures the change in total nonfarm payroll employment each month on a seasonally-adjusted basis.

The year-opening downturn charted in the ADP Canada National Employment Report produced by the ADP Research Institute arrived after an improvement of 105,000 jobs came in November and a jump of 338,000 jobs registered in December. In fact, that December rise in jobs was second only to the robust rebound of 1.353 million jobs recorded in July.

“January reported a decrease in jobs, the largest decrease since May 2020 during the lockdown period,” ADP chief economist Nela Richardson said in a news release. “The surge in COVID-19 cases and public health restrictions resulted in mass layoffs. Job losses were reported in every sector, led by trade, transportation and utilities, leisure and hospitality and construction.”

Nonetheless, a positive outlook came via the BMO Blue Book, published by BMO Economics and Canadian Commercial Banking.

The forecast combined the expertise of BMO’s economists with that of the company’s business bankers to compile an outlook for six key business sectors: technology and innovation, agriculture, real estate finance, seniors housing, hospitality and transportation.  

The BMO Blue Book indicated that the Canadian economy is expected to rebound by a “solid” 5.0% this year. But experts said the real gains will come after a first-quarter lull passes. 

“This year’s growth will largely reverse the 5.4% decline seen in 2020, leaving output roughly at pre-COVID levels by the end of this year,” BMO Financial Group chief economist Doug Porter said in a news release.

The BMO Blue Book projections delved into more details about specific regions, including:

Western Canada

Experts said British Columbia is expected to lead the country in real GDP growth this year, with a 5.7% rebound expected. The forecast indicated this firm recovery comes in part because the province has not had to implement tough measures to start the year.

BMO acknowledged Alberta is still grappling with various measures, but they are set to be rolled back, and the better-than-expected oil price backdrop is encouraging. 

“Real GDP is expected to rebound 5.1%, while business confidence has improved more than anywhere else in Canada in recent months,” experts said.

Prairies

BMO highlighted that Saskatchewan should benefit from an improved energy-price environment, with a growth rate of 4.4%.

Experts pointed out that Manitoba is traditionally the most stable economy on the provincial landscape, with a diverse industry base providing a cushion. 

“While the province has underperformed given challenging COVID case trends forcing more aggressive containment measures, the economy should still grow 4.6% this year,” BMO said.

Central Canada

With the largest urban center, BMO acknowledged Ontario has struggled more than most with the shape of its COVID-19 curve, longer first-wave lockdowns and second-wave restrictions, too.

“Torrid housing and consumer spending performances should cushion the blow, even as impacted Main Street businesses continue to struggle and limit the rebound to 5.0%,” experts said. “As vaccination becomes more widespread later in the year, look for Ontario to lead the recovery.
BMO also mentioned Quebec has struggled heavily with COVID-19 cases which prompted aggressive lockdowns last year, which persisted into February. 

“As a result, it will likely underperform with 4.8% growth this year, but should come back stronger in the second half of the year,” experts added.

Atlantic Canada

BMO highlighted that Atlantic Canada fared “very well” on the COVID front on a relative basis, but much of the regional economy is nevertheless impacted. 

“The ‘Atlantic Bubble’ has been a success from a healthcare perspective, but has hurt activity in a number of sectors (such as travel and tourism) that depend on flows from other regions,” experts said.

“Longer term, a population boom had spurred above-potential economic growth in the region pre-pandemic, and it remains to be seen when those flows will return,” they went on to say.

No matter if it’s Sydney in the East or Surrey in the West, getting COVID-19 vaccines to all Canadians is crucial to a recovery and a priority of Prime Minister Justin Trudeau. 

On Feb. 2, Trudeau announced the government has signed a memorandum of understanding with Novavax to pursue the production of its COVID-19 vaccine at the National Research Council of Canada’s Biologics Manufacturing Center in Montreal along with other investments to support vaccine, therapeutic and biomanufacturing projects in Canada.

“Since the beginning of the pandemic, our top priority has been the health and safety of all Canadians,” Trudeau said in a news release. “We are investing in our biomanufacturing capacity so that we have the made-in-Canada vaccines and treatments we need to protect Canadians, now and in the future, and recover from the impacts of COVID-19.”